CPM and CPA Pricing Methods in Video Ads

The reality is, Banner & Video Ads help run the Web. Ads support all the free services and contents we enjoy on the web; including games. There are several Ad formats – video, several banner formats, etc.

In this post, I want to quickly touch on the models of Ads AppLixir Video Ad platform serves (CPM and CPA or CPI) and how these models affect pricing.

CPM and CPA represent different pricing methods in advertising, placed by mobile ad platforms (a bit of shameless self-promotion). CP in those acronyms stands for “Cost Per…” There are different types of things different advertisers choose to pay for and so there are different pricing methods – a number of times an ad is viewed, a number of times users purchase something after watching an ad, a number of times an ad is clicked among much more. In this piece, we will take a closer look into CPM and CPA pricing methods.

CPM

Cost per thousand (CPM) denotes the price of 1,000 advertisement impressions on one webpage. If a website publisher charges $2.00 CPM, that means an advertiser must pay $2.00 for every 1,000 impressions of its ad. The “M” in CPM represents the Roman numeral for 1,000. CPM is one of the most used and one of the oldest methods for pricing the selling and buying of ad inventory.

CPM calculation considers several factors but major variables affecting CPM are

Geo location

Engagement rate

Click rate

View complete rate

Player size

Video quality

Content quality

Audience quality

Month of the year

Day of the month

Sales channel (direct, network or exchange)

Audience makeup

Here are the Average CPMs we are seeing across different regions

CPA

CPA stands for “Cost per Action”, and it represents the pricing model where advertisers get to pay for each specified action. For example – an action after the watching an Ad, (ex. visiting the website, rating the product, installing a new app or submitting personal information). It all depends on the type of app and the ad campaign.

Some of the other pricing methods advertisers use in modern ad world are CPI and CPC. CPI represents “Cost per Install” and it’s basically a more specified version of CPA. CPC stands for “Cost per Click” and here advertisers pay for every time their ads get clicked.

These types of Ads do pay more than CPM but come with a catch. If your site has a good Click-through and conversion, you can easily double your Ad revenue by using this Ad Model. If your site has a less than average CTR, you will be much better off with CPM ads.

There are different ways to approach video advertising and general in-app advertising. Properly placed ads and properly developed advertising campaign can help you generate great revenue from ads. Every pricing method has its own advantages and disadvantages, what makes them generate revenue is the campaign behind it.

AppLixir can help you understand the best ways to monetize your app. Visit us at www.applixir.com